Housing finance commitments continue to decline
ABS data on housing finance commitments released last Wednesday point to a further slowdown in housing lending activity in South Australia. The number of housing finance commitments for owner occupation in trend terms for South Australia fell by 1.1 per cent in June, and has fallen for 12 consecutive months now. The number of commitments for June 2017 was down 8.7 per cent compared to a year earlier. In comparison, housing finance commitments for Australia as a whole fell by 0.2 per cent in June and were down 2.8 per cent through the year.
The recent decline in housing finance commitments for South Australia appears to be partly due to a fall in refinancing activity for established dwellings.
Loans for the construction or purchase of new housing continues to rise, which is consistent with recent trends in residential building approvals and is a positive sign for the residential building sector. The total number of loans for new home construction in the three months to June 2017 was up 2.0 per cent compared to the corresponding period a year earlier. In comparison, the number of loans for the purchase of established dwellings excluding refinancing was down 6.0 per cent between these periods.
Participation of first home buyers appears to have picked up over recent months in South Australia but remains at a very low level by historical standards. First home buyers accounted for 14 per cent of all dwelling finance commitments in June.
The 2015/16 release of the ABS’s Major Labour Costs Survey provides some interesting insight into the total costs incurred by employers as a consequence of employing labour. In addition to earnings, these costs comprise superannuation, payroll tax, workers’ compensation costs and fringe benefits tax.
Total labour costs incurred by employers in South Australia during 2015/16 were estimated to be $46.2 billion. Total labour costs nationally were $760.9 billion.
Earnings accounted for 87.3 per cent of total labour costs in South Australia, which is exactly in line with the share nationally.
Payroll tax accounted for 2.3 per cent of total labour costs in South Australia in 2015/16, which is below the corresponding national figure of 2.9 per cent. In fact, only the Australian Capital Territory recorded a lower share for payroll tax (1.9 per cent), which indicates that South Australia provides a highly competitive payroll tax environment.
On the other hand, workers’ compensation costs as a proportion of total labour costs was highest for South Australia at 1.9 per cent compared with 1.4 per cent nationally. This result suggests that improving the performance and outcomes of South Australia’s workers compensation arrangements may be a potential vector for improving competitiveness.
Office market vacancy rate falls slightly
The latest issue of the Property Council of Australia’s Office Market Report indicates that the Adelaide CBD office vacancy rate fell marginally over the 6 months to July 2017, from 16.2 per cent to 16.1 per cent. The vacancy rate for Adelaide CBD remains well above the historical average level and is the second highest in the nation behind Perth (21.1 per cent).
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